What’s New with ERC: Delays, Denied Claims, and the Voluntary Disclosure Program

What’s New with ERC: Delays, Denied Claims, and the Voluntary Disclosure Program

The Facts About Delayed Refunds

The IRS has processed 3.6 million claims, but about 1.3 million are still pending. So, if you still have a pending claim, there is nothing to do but wait. Since the IRS announced a moratorium on the claims, they also have been scrutinizing those yet to be processed. This means that the originally promised 180-day turnaround time no longer applies, but the IRS said it will work on processing the oldest claims first; no claims submitted during the moratorium will be processed at this time.

Denied Claims and Your Chances for a Refund

According to a news release, a review of 1 million ERC claims “provided the IRS with new insight into risky employee retention credit activity and confirmed widespread concerns about a large number of improper claims,” IRS Commissioner Danny Werfel said in the release. “We will now use this information to deny billions of dollars in clearly improper claims.”

Here’s the rundown on the analysis:

  • Between 10% and 20% of the claims reviewed so far are in the highest risk group, meaning they show clear signs of errors and will be denied in the weeks ahead, the IRS said.
  • The IRS will gather more information about between 60% and 70% of the claims because they show an unacceptable level of risk.
  • Between 10% and 20% of the claims show a low risk. The IRS “will begin judiciously processing” more of these claims and expects some of these payments to be made later this summer.

If you filed a claim after the moratorium was announced in September 2023, yours will be the last in line, even if it is at a very low level of risk.

The Voluntary Disclosure Program and Special Withdrawal Program

Many businesses fell prey to the very aggressive marketing tactics of certain “ERC Hubs” who provided preparation of ERC claims based on misconstrued facts and poorly analyzed law.  “Our compliance activities involving these payments continue to accelerate, and the IRS urges businesses with concerns about their claims to talk to a reputable tax professional and consider joining one of our special disclosure or withdrawal programs,” said IRS Commissioner Danny Werfel. “We saw aggressive marketing around this credit, and well-intentioned businesses were misled into filing claims. There’s a limited time window available for these businesses to voluntarily come in and avoid future issues.”

The Innovative CPA Group is here to answer any additional questions and give you information about either of these programs.

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2024-07-02T17:01:00+00:00July 2nd, 2024|Business|

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